Monrovia – Lawmakers are bracing for the ratification of a concession agreement to outsource an oil bloc in Maryland County to Cosmo Oil Company Limited, FrontPage Africa has gathered.
Report by Henry Karmo – [email protected]
Sources within the legislature informed FrontPage Africa that the negotiation which began at the Executive necessitated the return of legislators to the Capitol.
Cosmo Oil Company Limited explores and produces crude oil. The company was founded in 2015 and is headquartered in Tokyo, Japan.
Cosmo Oil Company Limited operates as a subsidiary of Cosmo Energy Holdings Company Limited.
The ratification of the oil agreement, according to a lawmaker who asked for anonymity, told FrontPageAfrica that in addition to levying additional taxes on citizens through alcoholic beverages and telecommunications, outsourcing the oil bloc was one of the strategies government plans to use to raise money to support the National Budget.
The lawmaker believes the leadership crisis that led to the ousting of former Speaker J. Alex Tyler was due to government’s intention to carry out its plans.
“We are waiting; by the time they bring that agreement to us we will inform the Liberian people that this is all the leadership fight the public have witnessed in the legislature is all about,” the lawmaker said.
This paper reported last month that the legislature recall came about as a result of a meeting the President Ellen Johnson Sirleaf had with some members of the Legislature to speedily reconsider the amendment of the Revenue Code.
Accordingly, upon reconvening session, lawmakers are expected to consider instilling 10 percent of the taxable amount on alcoholic products and additional 5 percent surtax to telecommunications services.
This means, GSM companies and cell phones users would be taxed 1 percent per minute.
FPA also reported that lawmakers would also be taking into consideration the reduction of salaries of civil servants.
Our source, which is in the inner circles of government, hinted us that the government would not be able to function properly with the current state of the economy.
Last month, it was reported that Liberia’s oil industry was at a cross road.
The report stated that if no new production sharing contracts (PSCs) were signed and existing ones were not extended, there would be no oil company operating in the Liberian offshore oil basin by the end of the first half of 2018.
The report quoted a message conveyed by NOCAL officials during a recent series of outreach program in communities in the basin.
ExxonMobil with Canadian Oversea Petroleum Limited (COPL) and two other companies-African Petroleum and Chevron (Oranto)- made a total of three companies operating in the basin operating in four of the 30 existing oil blocks.
ExxonMobil (83%) with COPL (17%) has an eight–year production sharing contract (PSC) with Liberia for block 13, which expires April 5, 2018.
Chevron (70%) alongside Oranto (30) has three separate blocks 11, 12 and 14.
As well as their half-year extension periods, both blocks 11 and 12 have expired.
Chevron and Oranto are now left with a solitary block 14 whose nine-year PSC with the government runs until July 29, 2018.
Anadarko (47.5%), Repsol (27.5%) and Tullow (25%) have relinquished block 15. The PSC on that block expired on June 23 this year.
Repsol (75%) and Tullow (25) had relinquished blocks 16 and 17 respectively as early as 2012 and 2013, the latter at the end of a 10-year PSC with Liberia.
Anadarko (80%) again with Repsol (10%) and Mitsubishi (10%) relinquished block 10 for which it had a seven-year PSC that expired in 2015.
The current inactivity of the Liberian offshore oil basin is not unique to Liberia. Frontier oil countries like Liberia are suffering as the result of the ensuing global oil crisis.
Experts say the price of oil is likely to remain low due to oversupply of countries such as Saudi Arabia and Iran and the increase of oil obtained from sources in the U.S. with a new technology known as fracking.
The current prices are around US$50 per barrel, just over a third of the price of oil in 2008. Oil companies cannot afford to spend millions of dollars drilling in offshore wells with these prices.
The number of rigs worldwide has dropped by 30 to 43 percent, according to a rig count compiled in March by Simons & Co. International, an energy investment group based in United States. Rig count has also plummeted by 43 percent in Africa and Latin America, it said.
NOCAL on the other hand has yet to recover from bankruptcy. Without new income from PSCs and without the sale of seismic data that has plummeted since the global oil crisis began it has no sources of income.
A year ago after the company revealed it was in financial turmoil, President Ellen Johnson Sirleaf announced reforms saying it had been grossly mismanaged and oversized.
Senior executives, the board of directors and more than two thirds of its workforce were laid off. An interim leadership, led by Cllr. Althea Sherman, has since been tasked with reviving NOCAL.
Cosmo Oil Company was formed on April 1, 1986, through the merger of Maruzen Petroleum and Daikyo Petroleum, a group of oil businesses based in Niigata Prefecture which merged in 1939.
In February 2015, the company said it would reorganize itself under a holding company to boost profitability. Also in 2015, in March, Cosmo Oil formed an LPG joint-venture by merging its LPG business with three other company’s LPG units.
